Overstock.com 2015 Annual Report Download - page 113

Revenue, for the period. We recently received an additional Tax Assessment for the period of June 2015 through November 2015 in the amount of
approximately $2.5 million in taxes, interest and/or penalties. The nature of the loss contingencies relating to the assessment is described above. We do not
believe that we had nexus in Washington during the alleged period and we intend to vigorously contest this administrative action.
On October 28, 2015, Kobace LLC filed suit against us in the United States District Court, Eastern District of Texas alleging patent infringement of
United States Patent No. 8,626,818 entitled “System and Method for Generating User Contexts for Targeted Advertising.” The nature of the loss
contingencies relating to claims that have been asserted against us are described above. However, no estimate of the loss or range of loss can be made. We
intend to vigorously defend this action.
We establish liabilities when a particular contingency is probable and estimable. At December 31, 2015, we have accrued $12.0 million in light of
probable and estimable liabilities. It is reasonably possible that the actual losses may exceed our accrued liabilities. We have other contingencies which are
reasonably possible; however, the reasonably possible exposure to losses cannot currently be estimated.
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During our normal course of business, we have made certain indemnities, commitments, and guarantees under which we may be required to make
payments in relation to certain transactions. These indemnities include, but are not limited to, indemnities to various lessors in connection with facility leases
for certain claims arising from such facility or lease, the environmental indemnity we entered into in favor of the lenders under our Loan Agreement with U.S.
Bank and other banks, and indemnities to our directors and officers to the maximum extent permitted under the laws of the State of Delaware. The duration of
these indemnities, commitments, and guarantees varies, and in certain cases, is indefinite. In addition, the majority of these indemnities, commitments, and
guarantees do not provide for any limitation of the maximum potential future payments we could be obligated to make. As such, we are unable to estimate
with any reasonableness our potential exposure under these items. We have not recorded any liability for these indemnities, commitments, and guarantees in
the accompanying consolidated balance sheets. We do, however, accrue for losses for any known contingent liability, including those that may arise from
indemnification provisions, when future payment is both probable and reasonably estimable.
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Each share of common stock has the right to one vote. The holders of common stock are also entitled to receive dividends whenever funds are
legally available and when declared by the board of directors, subject to prior rights of holders of all classes of stock outstanding having priority rights as to
dividends. No dividends have been declared or paid on our common stock through December 31, 2015.
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Our board of directors adopted the 2005 Equity Incentive Plan and it was most recently amended and restated and re-approved by the stockholders
on May 3, 2012 (as so amended and restated, the "Plan"). Under the Plan, the board of directors may issue incentive stock options to employees and directors
of the Company and non-qualified stock options to consultants, as well as restricted stock units and other types of equity awards of the Company. Options
granted under this Plan generally expire at the end of ten years and vest in accordance with a vesting schedule determined by our board of directors, usually
over four years from the grant date. We did not grant any options during the years ended December 31, 2015, 2014 and 2013. At December 31, 2015, 2.5
million shares of stock remained available for future grants under the Plan. We settle stock option exercises with newly issued common shares.
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